business news in context, analysis with attitude

Published on: April 14, 2016

This commentary is available as both text and video; enjoy both or either ... they are similar, but not exactly the same. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, Kevin Coupe here and this is faceTime with the Content Guy ... coming to you this week from University Village in Seattle, Washington, home of the very first Amazon Books store.

Now, I have to be honest. While I was looking forward to seeing this store, I had my doubts. I've always been skeptical about the speculation that Amazon would get into the bricks-and-mortar retailing business. I'm not sure it is where Amazon wants to be. I'm not sure it is where Amazon should be. But I definitely wanted to see what Amazon was up to, and if it might be scalable.

Let me be honest again. I'm really, really impressed with this store. There are pictures below the video box that will give you a sense of it, but let me give you my impressions.

The store isn't very big, and it is chock full of books ... but it also is chock full of customers. Some of this is location - in a very popular shipping center, right in the shadow of the University of Washington. Some of it is natural curiosity - the Amazon brand name has a lot of sex appeal, especially here, in its home town.

But while that might be while people are walking in the front door, that doesn't explain while they're staying. perusing. And buying. Definitely buying.

People are going into the store and perusing the limited assortment that the store carries - all books classified as best sellers on Amazon's web site. They're reading the online user reviews that Amazon is posting beneath each title. They're settling back on some of the furniture to thumb through books in the same way they might at a typical mainstream bookstore.

They may be coming in for the books, but they're also, from all the evidence, spending considerable time looking at the Amazon technology that is on display - Kindles, Fire TVs, Echoes, tablets, etc... all products that people can play with to their hearts' content. And keep in mind that when people buy any of these products, they're being sucked little by little, more and more, into the Amazon ecosystem ... because all of these pieces of equipment are designed to make it easier or easiest to buy pretty much anything from Amazon.

Now, not everybody gets it. There was one old guy who clearly wanted to test the concept, and he asked if they had "Jonathan Livingston Seagull" in stock. They checked on their tablet computers and said they did not, but would be happy to order it for delivery to his home. And he sort of snorted and said, "How can you be a bookstore if you don't have 'Jonathan Livingston Seagull?'" (Which I thought was a sort of silly question since I don't think anyone has read "Jonathan Livingston Seagull" since 1978, and it clearly indicated he did not get the whole notion of synergy between a bricks-and-mortar retailer and an online store.)

One of the things that I found to be unexpectedly enticing about the store was the staff - these were high-caliber, friendly, informative young people working the store, and they help to make the experience unique. Which is a little surprising since Jeff Bezos is know for liking business models with as few actual humans as possible. But the folks in Amazon Books are so great they ought to be cloned. (Though maybe we don't want to give Bezos any ideas...)

In short, Amazon Books is a highly engaging store that manages, despite some similarities to traditional bookstores and formats such as the Apple Store, to feel entirely original. (Not imitative, which is usually how the Microsoft Store feels.)

Will they have 200, 300, or 400 of these? I have no idea. I don't think this format is made for every location, but I can see it being entirely appropriate for a number of very specific locations. I could also see them using the template to build an Amazon Fresh prototype, maybe selling fresh foods provided by outside purveyors within the four walls, and then having a delivery bay outside where one could pick up packaged products that had been pre-ordered online because there's no reason to have them on customer-facing shelves.

At any rate, this clearly is a test of how far and wide Amazon can grow its ecosystem. Equally clearly, it reflects the likelihood that Amazon believes that there is a lot of consumer territory yet to claim.

That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

Published on: April 14, 2016

by Kevin Coupe

Enders Analysis is out with research indicating that "record growth in 2015 shows Netflix to be well on its way to achieving its goal of 60-90 million US streaming customers and a global base of 150 million by 2020."

Indeed, the analysis suggests that the streaming subscription video-on-demand (SVOD) business is largely responsible for driving the success of a company that started out renting DVDs ... but never really saw itself as a video rental company, but rather as a content provider.

"The simplicity and single-mindedness of the Netflix model is hard to beat," Enders writes, "with evidence suggesting it has extended its lead in the toughest of markets, the US. Although growing spend on content origination is putting a strain on the Netflix business, it is critical to long-term success, contributing to the distinctiveness of the Netflix offer and its complementariness with other SVOD services.”

I know it is hard for people younger than a certain age to imagine, but there was a time when streaming did not exist, when video-on-demand did not exist, and when there were fewer than a dozen channels to choose from. So much of what Netflix has helped to bring about was almost unimaginable not that long ago, and now is continues to innovate and disrupt and create a distinctive voice in the industry.

The Eye-Opener ought to be that companies that do not innovate and disrupt and create a distinctive voice - in almost every industry - have little chance of succeeding.

Published on: April 14, 2016

Shawn K. Stevens, a food safety attorney who works for a number of food industry companies, has a column on Food Safety Tech in which he writes that the US Food and Drug Administration (FDA) "intends to pursue criminal investigations against any food company executives or quality assurance (QA) managers involved in cases in which a link is made between a positive sample collected by the agency from a food facility or product and a foodborne illness."

Indeed, Stevens writes, the FDA intends to work with the US Department of Justice "to aggressively enforce food safety laws," and that "criminal prosecution of food companies is a priority moving forward."

While probes are ongoing into companies such as Chipotle and Blue Bell, Stevens writes that "the most important lesson to be learned is that food companies must be prepared to better control pathogens in their environment in order to protect themselves from criminal prosecutions."

Published on: April 14, 2016

The Wall Street Journalhas a story about how "shopping on a small screen used to be a pain. But as consumers spend more of their days glued to smartphones, retailers are getting savvier with apps that ease browsing, offer rewards, suggest the right products and simplify the purchase to one click ... The retailers that are succeeding are training customers to think of their smartphones like an all-day impulse aisle. Apps are able to capture data available on handsets and push consumers to buy when they have a spare moment." And, "the average U.S. consumer last year spent 3 hours and 5 minutes a day using apps, compared with 51 minutes surfing the mobile Web, according to eMarketer."

The story points out that "mobile sales are booming, especially compared with sales gains from desktop computers. Last year, U.S. sales from mobile devices jumped 56% to $49.2 billion, doubling the previous year’s growth, according to comScore. Desktop sales still dwarf mobile, reaching $256.1 billion last year, but annual growth slowed to 8.1% from 12.5%."

Published on: April 14, 2016

Nielsen is out with a new survey saying that "nearly 9 out of every 10 (88%) of U.S. beer drinkers say that it’s a great time to be a beer lover." And while overall beer sales are up in the single digits, certain categories - like craft beers and imported beers, are growing much more, up 14 percent and 10.7 percent respectively, during the past year.

The study says that much of this growth is being driven by beer drinkers ahed 30-39, with more of them saying "they enjoy trying new types of beer (85%, compared with 70% of all U.S. beer drinkers), and they are even more passionate fans of local beer (76% vs. 64%)."

As for craft beers, the study says, "Local beers are taking center stage. While 64% of overall beer drinkers say that they are fans of local beers, that figure jumps to 86% for craft beer drinkers. And in many local markets, it’s the locally produced brands that lead the way. In Seattle, for example, four of the top five craft beers are from that region."

Which may explain why major brewers are eying small, craft brewers as acquisition targets, reasoning that they need to own a piece of this faster growth curve.

Case in point: The Chicago Tribune reports that "Anheuser-Busch InBev has announced plans to buy Devils Backbone Brewing Co., the eighth craft brewery that the global beer behemoth has purchased during the past five years." Virginia-based Devils Backbone, the story notes, was "founded in 2008, has won 28 medals at the Great American Beer Festival and was named the nation’s midsize brewer of the year in 2014."

Terms of the deal were not disclosed.

Published on: April 14, 2016

Bloomberg reports on a speech given by Facebook CEO Mark Zuckerberg at the company’s annual F8 developer conference in San Francisco, in which he "outlined a 10-year plan to alter the way people interact with each other and the brands that keep advertising dollars rolling at the world’s largest social network."

Zuckerberg's vision, the story says, "includes having users chat with artificially intelligent bots on Facebook’s Messenger to do everything from getting sports updates to ordering a car service. Further into the future, Zuckerberg sees people interacting with virtual representations of places and objects, accessible through digital applications, instead of purchasing the objects or traveling in real life ... The plan for all of Facebook’s products, from messaging to virtual reality, will require building an audience and then getting developers to build an ecosystem of businesses that communicate with that audience. He encouraged businesses to build bots for Messenger, which has more than 900 million users, saying that interacting directly with customers via the chat service will replace downloading individual apps on phones."

“A lot of the things we think about as physical objects today, like a TV, will actually just be a $1 app in an app store,” Zuckerberg said.

Published on: April 14, 2016

The New York Times has a good story about "the bizarre world of Internet 'discounts,' which let retailers and brands assert that you are getting a stupendous deal because someone somewhere else — exactly where is never explained — is being charged much more."

Nobody would ever buy a cat litter pan for $2,159, or a windshield wiper blade for $1,504 ... but those are the list prices advertised for these items on Amazon, which, of course, discounts them significantly (to $28 and $15). But list prices often are illusory, and the way in which they often are bandied around on the unregulated internet often is confusing and sometimes even fraudulent.

So the question, the Times writes, is this: "When does e-commerce deliver on low prices, and when is it merely coasting on its reputation?"

This is a significant issue, it says, "as Internet retail shifts from being mostly about price to being largely about convenience. That will make it much harder for customers to judge independently if they are getting a deal or merely being encouraged to think so."

Interesting piece...and you can read it in its entirety here.

Published on: April 14, 2016

• Amazon this week has unveiled a revamped Amazon Wedding Registry, which it describes as being "simple, modern, fresh, and more relevant to millennial couples and their evolving needs. It also makes it easier and more fun to find the gifts you want and browse your list."

According to the announcement, "With Universal Registry, customers can add items from other sites to their Amazon Wedding Registry. Amazon also offers a one-time 10% Completion Wedding Gift on select products - not limited to registered-for items - which can be used up to 90-days after the big event. Orders of $49 or more of eligible items qualify for FREE Shipping. Customers who shop Amazon Smile can support their favorite charitable organization - Amazon will donate 0.5% of the purchase price for tens of millions of eligible items. Thank You List feature allows you to track which guest has purchased which gift for you. Amazon Wedding Registry also includes a 180-day return policy through our Online Returns Center.

Published on: April 14, 2016

...will return.